Obama met with students at the University of Texas-Pan American. "Just be careful about those credit cards, all right? Don't eat out as much," he said. After the foreclosure crisis, he warned, "the credit cards are next in line."

Thursday August 14, 2008, 12:20 am
Why Are We All Complicit In Our Own Economic Servitude?

Let me try a few words out on you: "Charge It," "Swipe It" and "Priceless." You know exactly what I am talking about. We all have credit and debit cards. We all use them, and many of us keep our lives going because of them.

That is, until the bill becomes due.

The sad truth is that we are all complicit in our own economic servitude, even if, at bottom, it's not our fault because we live in a consumption society, and don't feel we could live without them.

While many eyes are focusing on the housing meltdown and its hugely negative effect on an economy clearly moving into recession, few are paying attention to the next bubble expected to burst: credit cards. You would never know it by watching those slick VISA card ads on the Olympic TV broadcasts.

Combined with the subprime losses, such a credit card nightmare has the potential, experts say, of bringing down the entire financial system and global economy.

You and your credit card have become key players in the highly unstable financial crunch.

Mortgage lender cupidity and bank credit card greed, wedded to financial institution deregulation supported by both political parties, have been made manifestly worse by Bush administration support-the-rich policies. It has brought us to a brink not seen since just before the Great Depression.

While campaigning in Edinburg, Texas, in February, Barack Obama met with students at the University of Texas-Pan American. "Just be careful about those credit cards, all right? Don't eat out as much," he said. After the foreclosure crisis, he warned, "the credit cards are next in line."

The coupling of home equity debt and credit card debt has gone hand in glove for years. The homeowners at risk can no longer use their homes as ATM machines, thanks to their prior re-financings and equity loans, often used in the past to pay off their credit cards. Indeed, homeowners cashed out $1.2 trillion from their home equity from 2002 to 2007 to pay down credit card debts and to cover other costs of living, according to the public policy research organization Demos.

To compound the problem, fewer people are paying their credit card bills on time. And, to flip the old paradigm, more are using high-interest credit card cash to pay at least part of their mortgages, instead of the other way around.

Younger people are being crushed by this debt burden as college students and new consumers. Emma Johnson of MSN Money reports that "Generation Y" is broke:

"'The democratization of credit has really generated a competitive spending culture, and plastic has allowed for material goods not had in the previous generation,' says Bob Manning, author of 'Credit Card Nation.' 'Most of us grew up in a home with just one or two bathrooms for the whole family,' he points out; 'today, new homes usually have at least one bathroom per bedroom.'

'That change has happened so fast,' Manning says.

'This generation feels that somehow or another they're going to figure out some technological advancement that's going to get them out of their financial troubles and outsmart the market,' says Manning, who served as adviser to the documentary 'In Debt We Trust.' The documentary paints a picture of national financial crisis stemming from the personal-debt burden." (See InDebtWeTrust.com)

Happily, this issue is finally being addressed by Congress and the Federal Reserve Bank. When asked for comments, the public overloaded the Fed's website as the New York Times commented:

"When the Federal Reserve asked for comments on its proposed rules on abusive credit card practices, an astonishing 56,000 poured in. Most were from outraged consumers.

They told of interest rates skyrocketing when they paid an unrelated bill late. They complained of unwarranted late fees and pushed-up due dates. One Pennsylvania customer fumed: 'I'm fed up with credit card company tricks that drive us deeper in debt.'

This anguished deluge should send a clear message to leaders in Washington. The Federal Reserve should swiftly adopt its proposed rules against unfair or deceptive credit card practices. But the real burden to curb these abuses falls on Congress."

This discontent is being organized to press Congress to act by groups like the Consumer Federation of America and the Center for Responsible Lending. And Congress is listening:

"WASHINGTON (Reuters) - Legislation aimed at curbing credit card billing practices that surprise borrowers with unexpected interest rate increases and fees was approved on Thursday by a U.S. House of Representatives committee.

The bill approved by Financial Services Committee mirrors Federal Reserve proposals that would effectively end double-cycle billing -- in which card companies reach back to prior billing cycles to help calculate the interest charged in the current cycle."

These reforms are a start but much more needs to be done because its not just billing practices that are at issue - it is high interest changes, deceptive marketing, and arbitrary rules. On top of that, there are other loans that need scrutiny, including payday lenders and student loans. And, of course, our own addiction to shop until we drop.

Also, let us not forget that our credit card companies have been colonizing markets throughout the world. As the NY Times explained in a series on debt, "As the American blessing of credit cards became widespread, so did the American curse of debt."

Bear in mind the experience of another addicting industry - tobacco. As they came under restraints in the US, they escalated their poison pushing worldwide.

Debt is a global issue and has to be treated as such.

Just as groups like NACA provide help to homeowners in distress, we need a major effort to help the victims of credit cards - with practical assistance and political demands for regulation and relief.

Thursday August 14, 2008, 8:25 pm
We avoided credit cards completely until the mid-'80's. By then companies started snubbing you if you didn't have one, you couldn't rent a car, or get certain services without one. Just like they now want you to use automatic deposit for your paychecks.. that "paperless" society that needs everything in triplicet except your input!;)

Saturday August 16, 2008, 12:54 am
Wish it were that easy for that single mom with kids and full time job, low pay, no benefits,etc. I have known companies that hire only divorced women with families cause they know they can't quit and they don't pay for beans. It all starts with that one credit card and you are sunk. Stop with the if you can't pay cash, you can't afford it. What do you do when your child is ill or has a bad accident? What if his teeth are knocked out at 11. What if you get sick and can't work for a week or two. They love people like that and take full advantage of very bad situations. If you work you won't get help from anyone. Vicious cycle for women especially when the state fail to get your child support for you. See how easy it is for women to go down that ugly road and her answer, a damn credit card and she is ruined for years. Hate them

Saturday August 16, 2008, 3:04 pm
It is an individual choice whether you opt for credit or not. But along with that choice comes responsibility. Setting aside emergencies eg: hospital trips, most credit cards are used for the UNnecesseties of life. If you don't have money in your bank to cover purchases, or car rentals, or trips, or hotels, don't bloody use it. People go to coffee shops, corner stores, groceterias, restaurants, and buy on whim, even if they don't really want it, then charge it to their credit card. Doesn't matter if it costs $1.00 or $1000.00.
Before you sign up, there is an agreement stating what the rules are and what is expected from the company (like about 30% interest). It must be read or you're going to end up in trouble. It will be your fault, no one elses. Take responsibility for your own actions and don't whine about your plight. Cut up your cards. Live within your means. Life can be very good on a small budget.

Saturday August 16, 2008, 10:02 pm
One has to be very disciplined to have a credit card, only use for car rentals or hotels and always pay off the balance at the end of the month. And, of course, you have to be making enough money to save some every paycheck to be able to pay off that balance. If you can't do this, it's best not to have a card. I am lucky enough to be able to this now that I'm retired, have few wants or desires and live on a budget. I'm a depression baby so have always saved some money even if I had to eat beans or oatmeal for a few meals. But I do realize that things are different now (as my children keep telling me). I understand where Sandy is coming from though. Life nowdays is much harder for a single mom and children want so much. I live in Canada where we have free doctor visits and hospital so a healthcare emergency won't completely bankrupt us. However, dental, eyeglasses and prescriptions are not covered by the province so you have to that covered by a private plan or your place of employment. If you are 65 most prescriptions are paid by the province.

I wish they would get some kind of a health plan for U.S. citizens. My son lives in Texas so I know how difficult it is for all of you down there and I lived there for 20 years and did not have any health insurance for some of those years.

We do have to pay the province through our taxes for the health insurance but it goes by income. A single person with an income under $20,000 doesn't pay anything. Over that amount it goes up by degrees but the cost is nothing like private health insurers.